Don't miss the ocean's treasures when looking for commodities and inflation protection

Don't miss the ocean's treasures when looking for commodities and inflation protection

22 March 2021 from Mikael Syding

As recently as August 2020, the US ten-year government bond traded at prices corresponding to 0.50 percent annual interest. Today, seven months later, the interest rate has more than tripled to 1.75%. This is mainly due to higher growth expectations now that vaccine distribution has started. But the inflation threat is also being taken more and more seriously, except by the central banks.

US 10-year government bond yield

Note: Past performance is no reliable indicator of future results.

According to Shadowstats, actual inflation is almost 10%, if measured according to the same principles as in 1980 before the Fed began changing the definitions. It also rhymes better with the rapid increase in the money supply (M2) relative to growth in real GDP. The US stock markets, with Nasdaq in the lead, have fallen slightly on the interest rate threat, despite the US Federal Reserve promising to keep the key interest rate close to zero for at least another couple of years. Nasdaq is still twice as high as when the pandemic fear was at its worst just a year ago, so that particular variant of growth component at least gives me a fear of heights.

Official inflation is much lower than perceived

As an investor, with a logical and well-thought-out strategy, you want to take a positive part of both growth and inflation. In several forums, I have previously highlighted the company EMX Royalty corporation as an excellent way to achieve such exposure. EMX does not consist completely unlike my old Hublot Big Bang to about 2/3 gold (inflation protection) and 1/3 copper (economic growth, not least against electric cars and power distribution). But there is also another raw material with similar properties that can complement the mentioned metals, namely the sea rose gold, salmon.

It is both the values and the threat of regulation against the monopoly-like technology giants that make me want to avoid Nasdaq. In addition, there are more new listed companies than ever in the past year, and almost all of these are at a loss. When the interest rate rises quickly or above a certain threshold level, it is precisely the patience with losses that disappears first. A perhaps somewhat unexpected alternative to mines and information traders is Nordic fish stocks in the form of Vontobel's tracker product with the Solactive Nordic Seafood index as the underlying. In the last five months, the price has increased stronglyt but has actually only barely recovered from the corona fall a year ago. Among individual Norwegian fish stocks, Leröy Seafood (market value NOK 43 billion) has consistently developed best in recent years. In three years, the share has risen 55% and so far this year by 19%.

Through the fish stocks, you could get at the same time exposure to environmental considerations with reduced focus on terrestrial meat animals, to money-pressing and actual (Shadowstats) consumer price inflation, and to a growing global protein demand (growing population, declining productive agricultural area, increasing living standards).

@Mikael Syding

Important legal information

Legal notice

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

03/12/2021 02:07:19


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